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Swiss Voters To Execs: Say Hello To The Salary Cap

On Sunday, voters in Switzerland approved a referendum to place severe restrictions on the amount of compensation executives and directors of domestic companies are able to earn. In addition to giving shareholders binding say on pay packages, the "Minder initiative" -- named after businessman and measure supporter Thomas Minder -- will prohibit companies from giving "golden parachutes" and other special executive bonuses, with fines and prison sentences for violators. The referendum now goes to the government, which will create a proposed law to pass on to the Swiss parliament.

What's the Big Idea?

The success of the measure results from public anger at pay abuses involving several major Swiss companies, including pharmaceutical giant Novartis, whose former CEO Daniel Vasella was promised a golden parachute of 72 million Swiss francs (about $76 million). Although he ended up turning down the offer, his remains a stark example of how company boards are believed to have been shortchanging shareholders. Sunday's vote comes on the heels of a proposal made last week by the European Union parliament to limit the amount of bankers' bonuses to no more than twice their salaries.